India Retail Forum 2009: Retail lessons from the journey so far

On the second day of India Retail Forum 2009, panelists, comprising international and local retailers, highlighted the lessons learnt by Indian retail so far and future prospects

In the session on 'Retail Learning' at the India Retail Forum 2009, a panel comprising known faces of the retail industry, discussed the future prospects of Indian retail, noting the lessons learnt in the past decade.

The anchor, Raghu Pillai, president and chief executive, operations & strategy, Reliance Retail, kicked off the discussion, noting that it is "just the beginning of a tumultuous journey" for Indian retail. In the same breath, he celebrated the fact that the local retail industry has covered a fair bit of ground, and nearly all formats that are available globally have made their presence felt locally too.

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Looking at the past decade, Hemant Bakshi, executive director, sales and customer development, Hindustan Unilever said that while traditional trade still scores over modern retail, a look at the SEC A segment shows that as high as 70 per cent prefer modern trade.

The challenge ahead for Indian retail is how to make it appealing to the lower income groups as well.

Bakshi further suggested that business models must be made more viable, with specific attention to backend operations and supply chains.

The third challenge that Bakshi pointed was to figure out how to accommodate both modern and traditional trade, to ensure smooth hybrid trading in the future.

The international observer in the discussion, Paul Martin, business development director, Planet Retail spoke next. While he lauded Indian retail for having made substantial progress, he pointed out how "people in India expect miracles overnight".

"We monitored retail giants. They made many mistakes over the years. As the saying goes, 'Rome wasn't built in a day'. Give retailers time," Martin said, urging the industry to learn from successful international retail stories.

Martin also hit out at people who move from one retail house to another in a matter of months. "How can you bring stability to business, if the biggies do not stay in the company for more than a couple of months?" he remarked.

Moullec also stressed on being patient with retailers to build successful models. "Look at major successes in the West. It took literally years for retailers like TESCO to be big," he said.

Vineet Kapila, chief executive officer, Spencer's Retail, admitted to have been "learning from outside", being a new entrant into the industry. He pointed out that the last 12-14 months have been the most difficult for the industry.

"People assumed that throwing in capital, building brick and mortar structures would fetch business. That was arrogance and that is where things fell apart," Kapila said.

He warned that not enough homework was done by entrepreneurs and that consumers needed to be understood closely and not be taken for granted.

Kapila emphasised that there is a need to build capabilities and understand that retail is a "business of million moving parts". Retailers must collaborate with vendors, partners and property developers, he said.

V Ramachandran, director, sales and marketing, LG India said that there is an absence of "shop-for-value proposition". "The shopper still does not have the confidence that he is getting the best value from the retailer," he said.

Citing how the introduction of sachets revolutionised shampoo usage in India, Bakshi said, "We need to create a 'sachet' on modern trade."

Towards the end of the discussion, Pillai asked the panelists, "Where do you see Indian retail in the next 5-10 years?"

While all panelists agreed that predictions are difficult, each had their own point of view.

Kapila said that he is sure the industry is going to make the economy more efficient. "It is going to make everybody happy," he concluded.

Martin said while the future looked bright, there will be hiccups. "Modern trade will co-exist with traditional trade. It is going to be a journey and every journey will have its complications," he said.

Bakshi said that the past year will be remembered, as the industry moves ahead. "We have corrected our mistakes. It will be wrong to assume that traditional trade will disappear. It will evolve and compete better. The eventual winner will be the consumer," said Bakshi.

As the last word, Pillai said, "(The future) will depend on our own ability and the shampoo sachet variant of retail."